Australian dollar hit by weak Caixin China PMI

The Caixin services PMi is out and sucks:

The Caixin China Composite PMI™ data (which covers both manufacturing and services) showed that business activity in China rose only marginally overall. The rate of expansion slowed to the weakest since last October, as signalled by the Composite Output Index edging down from 51.5 in May to 50.6 in June.

The lower headline index reading was driven by falls in the sector headline readings for both services and manufacturing. The seasonally adjusted Chinese Services Business Activity Index fell from 52.7 in May to 52.0 in June, signalling only a modest rate of expansion that was the slowest since February. At the same time, manufacturing output declined for the first time in five months, albeit only marginally.

Total new business at the composite level also rose at a softer pace in June compared to May. Services firms reported a slightly stronger increase in new work, supported by state policies that boosted client spending. There were also mentions of new product launches and a general improvement in market conditions. In stark contrast, factory orders received by Chinese manufacturing firms decreased during the month amid reports of trade tensions.

Disruptions to trade led to a slight reduction in new work from abroad at manufacturers in June. The latest data marked the third drop in external demand at Chinese factories in the year to-date, although the latest fall was only fractional overall. Notably though, a decline was also recorded at service companies for the first time in nine months.

With regards to employment, composite data indicated a second consecutive fall in job numbers across China’s private sector economy. Similar to that seen in May, the rate at which employment decreased was slight, and mainly driven by reduced staffing at manufacturing companies. Services firms meanwhile reported a broadly unchanged level of employment, as greater hiring to meet higher new business was weighed on by the non-replacement of voluntary leavers.

Outstanding business at Chinese private sector firms increased marginally in June. That said, this represented the fastest rise in backlogs since the end of 2018. As service providers continued to reduce the amount of work-in-hand, the rise was centred on goods producers who related this to lower production levels and sustained job shedding.

Price pressures remained historically subdued in June, as the rate of overall input price inflation at Chinese companies was broadly in line with that seen in May. Services firms saw a moderate increase in operating costs, reportedly linked to higher staff expenses and elevated purchasing activity. At the same time, manufacturers reported only a marginal uplift in input prices. However, this still represented the quickest rise in overall costs faced by goods producers since November 2018.

With input price inflation still soft, private sector companies afforded another marginal increase in selling charges. Both services and manufacturing firms recorded a similarly slight uptick, although the overall rise was the strongest for three months. For manufacturers, the mark-up in output prices during June followed an unchanged price level in May.

Lastly, expectations at Chinese firms regarding future activity fell to a record-low for the second consecutive month in June. While service sector companies remained strongly optimistic, the outlook among manufacturers was only marginally positive overall. Some companies expected the launch of new products and expansion plans to boost output in the year ahead, while others were concerned about the ChinaUS trade tensions.

That is garbage. The Aussie dollar is roughly even after taking a hit:

Bonds are bid:

Stocks flat:

Big Iron is breaking out. We are now selling the rally:

Big Gas is trash. Good riddance:

We’re rotating into Big Gold:

Big Banks are down again. This rally looks in trouble unless yields fall materially lower in a hurry and, even then, when the cuts come they are caput:

Big Realty is being sold for profits post-RBA:

Banks in trouble. Iron ore bubble. Massively expensive. Not very attractive!